Air New Zealand

Abstract

Governments and Nations around the world want to 'possess' an international airline. It is symbolic. But few, if any, will grow and prosper in the long-term without some form of government subsidy or aid - even in the world's richest nations. Air New Zealand (Air NZ) is no exception to this pattern. Privatised in 1989 but re-nationalised in 2001, Air NZ has fallen prey to poor strategy implementation, intense competition and disagreements amongst stakeholders with radically different ambitions and perspectives. Air NZ acquired the Australian carrier, Ansett, in the 1990s to gain an important foothold in a market where it needs to have a presence. But for a variety of reasons it paid too high a price and a logically defensible strategy engineered a cash crisis. The New Zealand government was reluctant to allow control of its flagship airline to fall into foreign hands, particularly ownership by a rival such as Qantas or Singapore International Airlines. But, at the same time, the funding requirements were excessive for New Zealand's domestic capital market. Re-nationalisation became inevitable if the airline was to survive. Later Air New Zealand and Qantas proposed a strategic alliance and the sale of Air NZ shares to Qantas - only to find opposition from the competition authorities in both New Zealand and Australia. Air New Zealand had become increasingly crisis prone - but how much of this was management failings and how much the result of interference, misjudgement and mismanagement by government?